NEW VICTORIA MILLS COMPANY LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THERE were two applications for reference before the Income-tax Appellate Tribunal, one arising out of income-tax proceedings and the other arising out of Excess Profits Tax proceedings. The Tribunal has made one combined reference under Section 66(1), Income-tax Act and Section 66(1)," Income-tax Act read with Section 21, Excess Profits Tax Act. The question arising in both was identical and has been framed as follows:

(2.) THE facts of the case, as they appear from the statement, are as follows. THE assessee in its return for the assessment year 1942-43 included a sum of Rs. 2,06,695/- as an item of income received by the assessee company from the Kanpur Dyeing and Cloth Printing Co. Ltd. towards the deferred price of 'dusuti' cloth. THE Income-tax Officer, however, held that this was not income of the assessee and made the assessment on the balance of the income returned after deducting this amount. THE reason given by him for excluding this amount from the return was that during the course of assessment of the Kanpur Dyeing and Cloth Printing Co. Ltd. this item had been claimed as an expenditure but it was disallowed by the Income-tax Officer. THE assessment became final as no party appealed against it. Against the assessment order of the Income-tax Officer in the case of the Kanpur Dyeing and Cloth Printing Co. Ltd. there was an appeal and the case ultimately reached the Income-tax Appellate Tribunal which disagreed with the Income-tax Officer and allowed the sum of Bs. 2,06,695/- as expenditure incurred by the Kanpur Dyeing and Cloth Printing Co. Ltd., and gave them credit for it under Section 10(2)(XV), Income-tax Act.